Data Unlocked: How B2B data sharing could unlock billions in untapped value

12 minute read
07 June 2023


Data is one of the drivers, if not the key driver, of modern economies. The World Economic Forum calculates that the global data economy is worth more than $3 trillion.

Unlike physical goods, data is "non-rival", meaning that multiple parties can use it without making it less available to others. Data retains, and potentially increases, its value when it is shared. Sharing non-personal data with suppliers, customers and partners offers businesses the opportunity to enhance products, boost sales, improve operations and even create new revenue streams.

As a result, improved data sharing could add up to 2.5% on average to a given country's GDP, according to analysis by the OECD. The European Round Table for Industry, a trade body based in Germany, predicts that we on the cusp of "a revolution in industrial data sharing" that will drive innovation, productivity and growth.

Policymakers can see the potential. Most conspicuously, the EU's European Data Act – which was approved by the European Parliament in March 2023 – aims to stimulate business-to-business (B2B) data sharing in the bloc.

In the UK, the National Data Strategy includes the ambition to "unlock the value of data across the economy". The country's pioneering Open Banking initiative, which obliged nine UK banks and building societies to allow licensed start-ups to access their data, has demonstrated the potential of B2B data sharing: during January 2023, 7 million consumers and SMEs used Open Banking-powered services.

Of course, B2B data sharing is not without its challenges. Companies must uphold the rights of data subjects and other stakeholders when sharing data. It can expose them to the risk of privacy breaches or cyber attacks. And scaling data-sharing initiatives will, for many organisations, require investments in technology.

Nevertheless, B2B data sharing offers organisations an opportunity to extract greater value from an asset that many already have in abundance. With the right frameworks in place, businesses that share data are likely to grow more than those that do not.

Data sharing in action

To date, the most visible examples of data sharing have come from the public sector. These include research data, particularly in health, and in areas such as transport and energy. The public sector starts with an advantage: more data is "open" and free to be shared. Data sharing might even be mandated.

Even when projects involve private data, they are easier to justify if the goal is a public good. Examples include work by the Retail Energy Code Company to counter energy theft, and data sharing for safety purposes coordinated between manufacturers, dealerships and government by the Society of Motor Manufacturers and Traders (SMMT).

But while purely B2B data sharing is a relatively new phenomenon, awareness is growing, says Jocelyn Paulley, partner at Gowling WLG and co-lead of the firm's Data Protection and Cyber Security practice. "Businesses are becoming alive to the value of the data they hold internally, and also the exponential value you can extract if you combine it with the right sorts of other datasets to create different insights."

And there is more going on than one might think, Paulley adds. "There's actually a lot more data sharing that happens than the general public are really aware of, particularly if you look at examples collected by groups like the Open Data Institute [ODI]."

Examples include HiLo Maritime Risk Management, a technology start-up that shares safety recommendations between shipping companies and the wider industry. It allows operators to compare data on operations, performance and finance, according to a case study published by the ODI. HiLo has delivered results: data sharing has reduced lifeboat accidents by 72%, engine room fires by 65% and bunker spills by 25%.

Data sharing is also helping companies meet their ESG obligations. Advanced Product Concept Analysis Environment (APROCONE) is a supply-chain data-sharing project run by Airbus and its partners. Sharing engineering data is speeding up aviation design processes and makes manufacturing more efficient – and it is also reducing the industry's carbon footprint, according to Airbus.

Drivers to B2B data sharing

One reason why businesses are beginning to investigate the potential of data sharing is an appreciation of the untapped value in the data they have accumulated, explains Helen Davenport, partner at Gowling WLG and co-lead, with Paulley, of the firm's Data Protection and Cyber Security practice.

"There is an understanding that there is a huge amount of potential value in data," says Davenport. "Businesses are thinking, how am I going to maximise that value? Especially when businesses are looking to grow, increase profits or looking at what others are doing."

One way is to offer access to data as a revenue stream. The SMMT is a case in point. The UK trade body has been collecting and sharing data on vehicles since the 1960s, but the growing accuracy and granularity of the data it collects, and the recognition within the industry of its value, has allowed the body to set up SMMT Data Intelligence, a commercial entity that collects, aggregates and licenses vehicle data.

"We provide an information service to [manufacturers], to the aftermarket and to the insurance and finance sector, and to government based around the product specifications of vehicles registered for use on the roads in the UK," says Seftton Samuels, managing director of SMMT Data Intelligence. "We've been doing that for many years. With the growth in importance of data, it's gone from a statistical service to something a whole lot more dynamic."

But tapping into the value of data can also mean improving processes and operations. "You don't have to create something new, it can be about examining your business flows," notes Paulley.

When competing organisations within an industry share a common problem, sometimes tackling it collectively is the most profitable approach – and combining data can help. The UK's Pension Dashboard scheme, based on shared data, allows consumers to obtain an up-to-date picture of their pensions holdings across providers. This is far more efficient than each business creating its own tracing and enquiry process.

Technology is another driver behind B2B data sharing. The vast and easily accessible resources of cloud computing, the advancement of data analytics and artificial intelligence, and the emergence of application programming interfaces (APIs), which automate sharing between data sources, have all made the exchange and application of data easier than ever before.

Perhaps unexpectedly, tighter data regulation might also make businesses more inclined to share it. In Europe and the UK, GDPR has provided a framework for understanding when personal data can and cannot be used, and, in many cases, required organisations to put technical and organisational measures in place to ensure an appropriate level of security.

This has clarified what companies can do with their data, just as it has defined what they can't, and given them the tools to manage it as a business asset.

Preparing to share

As we'll examine in detail throughout our 'Data Unlocked' series, there are decisions to be made and risks to be addressed to allow businesses to share data safely and profitably.

One question is how, at a high level, data will be shared. There are broadly speaking two dominant approaches. One is the federated model, in which parties sharing their data retain control over it and share access as and when it is needed. The other is to pool data together in a new, shared repository. Which of these is the right approach depends on the objectives of the project; some may require a mix of both approaches.

Another concern is how to define and enforce participants' legal rights and responsibilities. "The way you assert rights over data is primarily through contracts," explains Paulley. "For the vast majority of facts and figures, there is no intellectual property right, so you are reliant on what you have put in your contract when you give someone access to data."

It is essential to consider the legal and regulatory framework for data sharing at an early stage, and to have an audit trail for data being shared, as well as a sound governance structure. Whereas a contractual approach might be right for most data sharing agreements, others call for the creation of a new legal entity, such as a data trust or data commons, to define rights and responsibilities in relation to pooled data.

There are also technical decisions to make about how to store, structure and format data, and how to make sure it is kept secure while also making it accessible to legitimate third parties.

As yet, there are no simple answers to these questions. There is no single playbook for B2B data sharing, or as Paulley puts it, "a nice linear flow chart". Instead, organisations are having to develop their own best practice.

For this reason, B2B data-sharing initiatives need strong support at the highest level. "Top-level commitment through an organisation is really important to get projects off the ground," says Davenport. Stakeholders need to understand the benefits, and also their appetite for risk.

B2B data sharing is still in its infancy, but with government backing and a few innovators paving the way, it has the potential to become a widely adopted business strategy. To set themselves up for success, executives should be asking how sharing data could work for their organisations sooner rather than later.

Data Unlocked

Want to learn more about B2B data sharing? Read the other articles in our 'Data Unlocked' series:

If you have any questions relating to this article, or data sharing in general, please contact Jocelyn Paulley or Helen Davenport.

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